Royal Enfield to invest Rs 600 cr in new plant

Managing Director and CEO of Eicher Motors Siddhartha Lal during his visit to the Royal Enfield's manufacturing factory at Oragadam near Chennai on Friday

Royal Enfield (RE), motorcycle division of Eicher Motors, is to invest Rs 600 crore this financial year in a new manufacturing plant, in product development and research & development (R&D) centres.

Widgets Magazine

Speaking to reporters at its Oragadam facility, 40 km from here, Siddhartha Lal, managing director of Eicher Motors, said by the end of this year, total capacity would be around 675,000 units, about 200,000 more from last year.

The first phase of the Vallam Vadagal facility, seven km from the one at Oragadam, will be ready by September 2017. This will take the company's total annual manufacturing capacity to 900,000 units.

Asked if capacity expansion would bring down the waiting period, Lal said this had come down to three months, from a peak of 10-11 months. The company wishes to bring it down further, he said, while giving no numbers. A part of the proposed Rs 600 crore investment will go into the new facility. The balance will be for new engineering centres at Chennai and Britain, and for product development.

Lal said the company would be operating on two or three platforms at any given point. RE plans to bring the entire engineering team under one roof by stationing them at the new facility at Old Mahabalipuram Road, this metropolis' information technology 'corridor'.

Initially, this centre will have about 300 people and can accommodate up to 1,000. The UK centre will have 70 people.

The company's Himalayan brand, the recent addition, is selling around 1,000 units a month. Lal said RE's focus would be the 250-750cc range of engines. Besides India, it will focus on Southeast Asia and Latin America.

RE, he added, had maintained strong volume growth in the first quarter of 2016-17, continuing to take more orders than monthly supply. It is also adding at least two dealerships every month, the current total being 566.

“Our immediate business outlook remains strong and Royal Enfield continues to grow consistently, competitively and profitably, towards leading and expanding the mid-sized motorcycle segment globally," he said.

In June, RE opened a store in Manila, Philippines, with its global retail identity. That country is among the largest two-wheeler markets in the world. With a large chunk of the population using commuter motorcycles, there is an enormous potential for upgrading to mid-sized ones, the segment Enfield is in.

In Europe, it participated in Wheels & Waves, one of the most popular motorcycle customisation and surfing festivals, organised in Biarritz, France. THE ROAD AHEAD Royal Enfield to invest Rs 600 crore in 2016-17 last year it invested around Rs 500 crore Company to increase its production capacity to 6,75,000 by end of March 2017; up by 200,000 units against last year Investment includes enhancing capacity, to set up engineering centres & for product development By end of 2018, after Vallam Vadagal project’s phase-I completes, total capacity will increase to 900,000 units. New centres in Chennai and the UK will initially have 300 and 70 engineers respectively Company’s focus will continue to be in 250-7500cc segment To replicate India model, it would first strengthen presence in main cities and then expand in and around Latin America and Southeast Asian countries